Office of the Attorney General
Four Pharmaceutical Companies Agree to Pay $124 Million for Alleged Submission of False Claims to Medicaid

Attorney General Jack Conway announced today that Kentucky has joined with other states and the federal government in reaching an agreement with four pharmaceutical companies over allegations they submitted false claims to Medicaid. Mylan Pharmaceuticals, Inc. (MPI), UDL Laboratories, Inc. (UDL), AstraZeneca Pharmaceuticals LP and Ortho McNeil Pharmaceutical, Inc., will pay a total of $124 million to resolve claims that they violated the False Claims Act by failing to pay appropriate rebates for drugs that were paid for by Medicaid. As part of the settlements, the Commonwealth of Kentucky will recover more than $1.6 million in total state and federal dollars.  More than $500,000 will go to Kentucky’s Medicaid Program.

MPI, UDL, AstraZeneca and Ortho McNeil are participants in the Medicaid Rebate Program and executed rebate agreements with the United States.  By agreeing to participate in the Medicaid Rebate Program and signing these rebate agreements, the companies agreed to pay quarterly rebates to Medicaid that were based on the amount of money Medicaid paid for each company’s drugs.  The precise amount of a rebate is determined in part by whether a drug is considered an “innovator” (branded) or a “non-innovator” (generic) drug.  The rebate that must be paid for innovator drugs is higher than the rebate for non-innovator drugs.

Each of the companies agreed to pay a settlement to resolve allegations that it had sold innovator drugs that were manufactured by other companies and had classified those drugs as non-innovator drugs for Medicaid rebate purposes.  As a result of the improper classification of these drugs, the companies underpaid their rebate obligations to the Medicaid Program.

MPI and UDL have agreed to pay $118 million to resolve allegations that they underpaid their rebate obligations with respect to several MPI drugs (nifedipine extended release tablets, flecainide acetate, selegiline HCL, Orphenadrine Citrate Aspirin and Caffeine tablets, Triamterene/Hydrochlorothiazide, Propoxyphene HCL, Propoxyphene HCL/Aspirin/Caffeine, Prophyxphene Napsylate/Acetaminophen, Ibuprofen tablets, Bumetanide, Cepalexin, and Cefactor) and several UDL drugs (nifedipine extended release tablets, selegiline HCL, Triamterene & HCTZ, Propox Naps & APAP, Flecainide Acetate, Trihexyphenidyl, Ranitidine HCL syrup, Sucralfate Suspension, Selegiline HCL, and Bumetanide).  From the total, $7,279,135 will be paid to entities that participated in the Public Health Service’s Drug Pricing Program.

AstraZeneca agreed to pay $2.6 million to resolve allegations that it underpaid its rebate obligations with respect to Albuterol.  Ortho McNeil agreed to pay $3.4 million to resolve allegations that it underpaid its rebate obligations with respect to Dermatop.

Since taking office, Attorney General Conway has announced settlements and verdicts of nearly $100 million dollars with drug manufacturers including a jury verdict of $14.7 million against Astra Zeneca last week and a jury verdict of $16 million against Sandoz in June for defrauding the Medicaid program and Kentucky consumers by inflating the prices of their prescription drugs.